HudBay’s mine in Flin Flon, Manitoba, is seen in this file photo.
Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.
Canaccord Genuity has made several changes to its ratings, earnings forecasts and price targets of base metal miners after taking a fresh look at its supply and demand expectations for copper, nickel, zinc and uranium.
Overall, it raised its price forecasts for base metals, but lowered them for uranium prices.
"We are forecasting 2014 and 2015 surpluses for copper, before a return to deficit from 2016. We believe zinc is already in deficit, but visible inventories remain high. We are forecasting that the nickel market will return to deficit this year, but that extremely high ore and metal inventories are likely to limit the impact on the physical market for at least one to two years. We continue to see the global uranium market in surplus," summarized Canaccord analyst Gary Lampard in a research note.
One of the biggest changes to price targets was for HudBay Minerals Inc., rising to $13.50 (Canadian) from $11 as he maintained a "buy" rating. In addition to the higher expectations for base metal prices, HudBay's increased target reflects Mr. Lampard incorporating the recent acquisition of Augusta Resource and its Rosemont copper project in Arizona.
Mr. Lampard upgraded his rating on Thompson Creek Metals Co. to "hold" from "sell" and hiked his price target to $3 (Canadian) from $2.70. He downgraded Capstone Mining Corp. to "hold" from "buy" but hiked his price target to $3.10 (Canadian) from $3. He also downgraded Oceanic Iron Ore Corp. to "hold" from "speculative buy" and cut his price target to 35 cents (Canadian).
On the uranium front, Canaccord maintained a "hold" rating and $20 (Canadian) price target on Cameco Corp.
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JPMorgan has downgraded Potash Corporation of Saskatchewan Inc. to "neutral" from "overweight," both in response to recent stock price gains and because of worries that falling crop prices could pressure the fertilizer giant's shares.
"Falling crop prices in anticipation of record domestic corn and soybean supplies could weigh on the share price of Potash Corp. and the fertilizer companies," JPMorgan analyst Jeffrey J. Zekauskas was quoted as saying by StreetInsider.com.
He prefers fertilizer firm Mosaic right now, a stock that has only risen 2 per cent year to date compared with 13 per cent for Potash Corp.
Potash prices and volumes have improved over the past six months, with North American potash producer inventories 23 per cent lower than peak levels in December, Mr. Zekauskas noted. That has assisted prices and has provided incentives for buyers to make purchases in anticipation of future price increases.
His price target on Potash shares was unchanged, at $38 (U.S.). The analyst consensus price target over the next year is $34.64 (U.S.), according to Thomson Reuters data.
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Asian demand for North American lumber has proven more resilient than expected, RBC Dominion Securities analyst Paul Quinn said.
"While there has been much talk in the trade of a slowdown in Chinese log/lumber demand, we believe this has been somewhat exaggerated on the lumber side," he said.
The outlook for both Canfor Corp. and West Fraser Timber Co. Ltd. has improved accordingly, Mr. Quinn said.
"Canfor's time has come," Mr. Quinn said in upgrading the stock to "outperform" from "sector perform," while maintaining a $27 (Canadian) price target. "We believe the recent share price correction provides an attractive entry point."
The analyst also upgraded West Fraser to "outperform" from "sector perform," and raised his target price to $60 from $56. "We prefer West Fraser to the other large-cap integrated Canadian lumber company (Canfor), as West Fraser has a greater lumber geographic production footprint," Mr. Quinn said.
RBC also adjusted its ratings and price targets on a number of other Canadian lumber companies in advance of second-quarter earnings announcements for the sector.
Canfor Pulp Products Inc. was downgraded to "sector perform" from "outperform" and its target price lowered to $14 from $15; Norbord Inc.'s price target was lowered to $26 from $27 at a "sector perform" rating; and Tembec Inc.'s price target was raised to $4 from $3.50 at an "outperform" rating.
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Ag Growth International Inc. is "firing on all cylinders" in its international businesses, CIBC World Markets analyst Jacob Bout said.
While the manufacturer of grain handling equipment faces immediate risks, like flooding in Saskatchewan and conflict in Ukraine, Mr. Bout ranks Ag Growth as a top pick among Canadian small cap stocks.
He increased his price target to $51 (Canadian) from $47 and maintained a "sector performer" rating.
"We believe Ag Growth International has outstanding long-term international opportunities driven by prospects in Eastern Europe, Africa and Brazil," Mr. Bout said.
The analyst consensus price target over the next year is $51.13.
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In selling off its Saskatchewan oil assets, Painted Pony Petroleum Ltd. has narrowed its focus to its natural gas program in the Montney basin in B.C. and closed its financing gap, FirstEnergy Capital analyst Cody Kwong said.
The $100-million sale, announced Monday, "effectively transforms the Company into a pure play," Mr. Kwong said, and "makes its compelling five-year growth plans far more tangible in our eyes today."
He raised his target price on the stock to $21 (Canadian) from $20, while maintaining a "top pick" rating. The analyst consensus price target for Painted Pony over the next year is $16.91 (Canadian), according to Thomson Reuters.
"With some flaccidity being seen in the natural gas tape as of late, we would advocate taking an opportunistic position in Painted Pony on any stock price weakness," the analyst said.
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In other analyst actions:
Paradigm Capital upgraded ATS Automation Tooling Systems to "hold' from "sell" and raised its price target to $15 (Canadian) from $11. RBC also raised its target on the stock to $16 from $15 and reiterated a "sector perform" rating.
Barclays raised its price target on Empire to $76 (Canadian) from $72 and maintained an "overweight" rating.
Haywood Research downgraded Coalspur Mines to "hold" from "buy" and cut its price target to 20 cents (Canadian) from 50 cents.
Raymond James downgraded Pattern Energy Group to "market perform" from "outperform" but hiked its price target to $33 (U.S.) from $32.
Dundee Securities raised its price target on Copper Mountain Mining to $2.50 (Canadian) from $2 and maintained a "neutral" rating.
Beacon Securities initiated coverage on Great Prairie Energy Services with a "buy" rating and 75 cents (Canadian) price target.
Raymond James hiked its price target on Canyon Services Group to $22.50 (Canadian) from $20 and maintained a "strong buy" rating.
RBC Dominion Securities downgraded Louisiana-Pacific to "sector perform" from "outperform" and cut its price target to $16 (U.S.) from $18.
RBC Dominion Securities downgraded International Paper to "sector perform" from "outperform" and raised its price target to $53 (U.S.) from $52.25.
Nomura Securities raised its price target on Alcoa to $12 (U.S.) from $8 and maintained a "neutral" rating.
Raymond James downgraded Moody's to "market perform" from "outperform" and removed its $87 (U.S.) price target.
Raymond James downgraded McGraw Hill Financial to "market perform" from "outperform" and removed its price target of $84 (U.S.).
Merrill Lynch downgraded Gigamon to "underperform" from "neutral" and cut its price target to $11 (U.S.) from $23. Goldman Sachs also downgraded its rating to "neutral" from "buy" and slashed its price target to $14 from $29.
Guggenheim upgraded American Express to "buy" from "neutral" with a price target of $109 (U.S.).
Darcy Keith